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Tired Of Seeing A Starbucks At Every Corner? You Have Banks And Landlords To Blame

Tired Of Seeing A Starbucks At Every Corner? You Have Banks And Landlords To Blame

There is a simple reason why Starbucks Corporation (NASDAQ: SBUX) seems to sit on every street corner and in every mall. Banks and landlords favor national chains and large retailers over mom-and-pop stores because they are considered to be a much safer bet.

Unfortunately for many consumers, this means small businesses that give a street or a city a unique charm and differentiated experience struggle to survive.

Rewarding The Big Guys

According to Bloomberg, national retailers, such as Starbucks, are rewarded by banks and landlords given their perceived credit worthiness.

Related Link: Starbucks' New Tea Launch In Asia Marks The Most Aggressive Brand Expansion Since 2008

Landlords who want to sell or refinance a building will have a much easier time doing so when a national chain is attached to the property. This may explain why when an independent restaurant closes, a national chain takes it places.

"The reason your favorite pizza place is now a Subway may be tied to perceived credit worthiness, the desire for refinancing, and satisfying lenders that call the shots," the Bloomberg report noted.

Standing Up For The Small Businesses

Several cities are taking action to support small businesses that by default are disadvantaged against major chains. Small businesses may be able to offer a better product at a better price, but this isn't enough.

Several landlords in New York City prefer holding on to vacant spaces and "waiting for their very own McDonald's Corporation (NYSE: MCD) or maybe a CVS Health Corp (NYSE: CVS)."

Bloomberg pointed out that the city of San Francisco will offer financial incentives to landlords who offer a long-term lease to certain small businesses. Initiatives are underway in other cities, but many consumers are doubtful any meaningful change will arise.

Bottom line, Bloomberg concluded that "the reason your neighborhood increasingly resembles a hometown mall is because somebody's banker prefers it that way."

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